Financial Analysis Tools............................................................................................4 Stock Repurchases and the Benefits They Offer.............................................................................5 Alternative Operating Cash Flow Options.......................................................................................6 Issuing a Dividend.....................................................................................................................
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eunyoung First, Linear have paid stable dividends to shareholders since 1992. They initially set the dividend at a relatively low level. By setting the dividend at a low level, Linear could maintain a sustainable payout ratio. Also, shareholders come to expect dividends once a company starts paying it. If the company pays a dividend less than the expected dividend amount, shareholders will be frustrated. Linear’s management believes that paying dividends appeals to potential investors, who both
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Memorandum To: Richard Johnson, President From: Robert Kinkaid, Financial Vice President Subject: Appraise for the proposals Date: October 4. 2015 This memo writes for appraising president’s proposals. The Depreciation Method: It is hard to eliminate deferred tax liability through changing the depreciation method from tonnage-of-production method to straight line depreciation method. At the first, there is a comparison different depreciation method. Unit-of-production method is a depreciation
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1. 1.1 INTRODUCTION OF THE CASE This case is about the impact of an environmental factor (External issue) on dividend policy of the firm (Internal issue). The environmental disaster was Hurricane Katrina which was caused the huge destruction across the south-eastern United States. Because of the storm, the stock market notably fell down. Since it is possible that the price of the shares once more increase even more than before in the near future, Ashley Swenson, chief financial officer (CFO) of
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earnings of $10 per share and 5 million shares outstanding. Cat is a mature company with few growth opportunities and a stock price of $25 per share. Bob is a new firm with much higher growth opportunities and a stock price of $40 per share. Assume Bob acquires Cat using its own stock and the takeover adds no value. In a perfect capital market, how many shares must Bob offer Cat's shareholders in exchange for their shares? A) 1 share of new company after takeover for each share of Cat Enterprises
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conservative capital structure that is all consist of common stocks. At the end of 2006, Blaine’s balance sheet was the strongest in the industry. Not only was it debt-free, but the company also held $ 231 million in cash and securities. Common dividends’ paying was one of the largest uses of cash, and the payout ratio is abnormally high 50%. In a word the company have huge cash reserves with not many new profitable project to invest. We believe Blaine was “over-liquid and under-leveled” as the
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best to keep the dividend as it is now. Before I brief you on the specifics of my decision, I feel the need to provide basic information about our company that surrounds this issue. To be more specific, I am referring to the past decisions on our dividend policy and our financing needs. Even if you are already aware of the specifics, please bear with me as this has played a crucial role in my decision. Our company has generally had two different payout policies: the dividend payout and the stock
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Economy is yet to recover from one of its worst recessions ever. Moreover, share repurchases strategy has been driving the market value of the stock move upstream for some time now. As an effect of Edward Lampert’s accumulation of AZO share (Appendix - Figure 1), the company has been buying back its share since 2004. Edward Lampert is a corporate activist and the management of AutoZone (rather any firm would) feared his vigorous share purchases in the suspect of control over the management. For the last
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accomplish through her active-investor strategy? 2. What will be the effects of issuing $3 billion of new debt and using the proceeds either to pay a dividend or to repurchase shares on: a. Wrigley’s outstanding shares? b. Wrigley’s book value of equity? c. The price per share of Wrigley stock? d. Earnings per share? e. Debt interest coverage ratios and financial flexibility? f. Voting control by the Wrigley family? 3. What is Wrigley’s current (pre-re-capitalization)
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estimation error when financing costs change substantially. The financing costs associated with additional funds needed create "feedback," requiring a firm to borrow more than the original additional funds needed in order to meet the interest and dividend obligations of the amount borrowed. Original additional funds needed is calculated from a pro forma statement as a firm's total asset projections minus initially projected liabilities and
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